A New Nursing Home Anti-Arbitration Rule has Become the Template to Better Enable Victims Justice in Other Sectors

Effective November 28, 2016, you will no longer be required to sign an arbitration agreement when placing yourself, or a loved one, in a nursing home facility.

As part of a revolutionary ruling last week, Medicare and Medicaid regulators barred nursing homes that receive federal funding from mandating residents to sign an agreement that would force them to resolve disputes by arbitration and not in court, according to The New York Times.

With pre-dispute arbitration clauses in nursing home contracts coming to an end, the ubiquitous practice of protecting nursing homes for liability claims involving abuse, assault, harassment, neglect, and wrongful death also comes to an end. The arbitration clause essentially did not protect nursing home residents and their families’ basic legal rights in situations in which residenst may have suffered injury or harm, wrote the NYT.

The ruling ends pre-dispute arbitration at other corporations and institutions that also receive government support. For example, the Consumer Financial Protection Bureau just proposed a rule to stop credit card companies, banks, and other financial firms from using arbitration clauses meant to stop consumers from filing class-action lawsuits. The NYT points out that, if the new rule was in place when customers at Wells Fargo discovered that bogus accounts were being opened in their names, they would have been able to file a lawsuit; however, pre-dispute arbitration clauses they signed when they opened their legitimate accounts were found applicable to the fraudulent accounts as well. This denied the Wells Fargo customers from accessing justice in the courts.

The Department of Education also proposed a rule to limit the use of pre-dispute forced arbitration clauses in its school enrollment contracts when the contracts involve schools that participate federal direct loan programs, according to the NYT.

The Education Department proposal would, however, allow clauses if schools take steps to explain the clauses and do not make signing these clauses a condition of admission, which differs from the nursing home contracts, the NYT wrote. The rule, as it applies to schools, does not stop a so-called “predatory” school from pressuring or deceiving students to sign paperwork. This leaves those students with no options should they later challenge the agreements.

According to the NYT blog, the nursing home rule is now a model for putting a stop to pre-dispute forced arbitration that other regulators have used to “develop similarly strong reforms.”

The pre-dispute forced arbitration has developed into its own covert and “privatized tribunal system” that oversees all sorts of contracts, favoring big companies and protecting these firms from accountability for alleged wrongdoings. Because of this decades-long practice, not only do the wrongdoings persist, but they have been allowed to prosper.

The new nursing-home rule, as well as moves by federal agencies to ban forced arbitration are hoped to help victims seek the justice they deserve, the NYT points out.